Does anyone know if Consonlidating Debt really does help you get out of debt, or is it a scam?
by admin ~ February 17th, 2008 . Filed under: Personal Finance .
rigreen77 asked:
I am looking in to Debt Consolidating Companies, but don’t know if it’s a scam or if it actually helps me get out of Debt? Does or has anyone ever done this? If so which companies do you recommend?
Ammie Carolla
I am looking in to Debt Consolidating Companies, but don’t know if it’s a scam or if it actually helps me get out of Debt? Does or has anyone ever done this? If so which companies do you recommend?
Ammie Carolla
February 21st, 2008 at 1:29 am
Go with a local nonprofit credit counseling service. There are indeed scams out there, be cautious.
February 22nd, 2008 at 7:04 am
go to consumer credit counseling - they are not a scam and you do not pay them
February 23rd, 2008 at 3:40 am
I would recomend you call your lenders and try to set up a lower interest paymnt or a settlement. I work in finance, and I can tell you that many lenders do not work with these companies at all. They take advantage of you. Good luck!
February 26th, 2008 at 7:40 am
most have high interest rates so you end up paying more over a longer period, not worth it really
February 26th, 2008 at 10:01 am
It’s risky. They can really mess up your credit. Many advertise that they are a non-profit company. That is misleading - they still charge for their services. Also, some actually are run by credit card companies.
Best way is to work your way out of debt.
Good place to start - You can follow his “baby steps”. They really work if you are committed to being debt free. He also has a radio show so you can listen to him.
February 26th, 2008 at 4:27 pm
Unfortunately, I had to do this about five years ago when I finished college. I was up to my eyeballs in credit card debt and student loans–it was a disaster.
I did the consumer proposal thing because my debt wasn’t considered large enough for banckrupcy.
Anyway, all I can tell you is to do your homework. Research the company you want to use and also research the differences between bankrupcy and proposals.
Your credit will not be good at all for at least two years (for some it can be bad for almost five years) with a proposal. Also, keep in mind this will not clear out any student loans. The student loans will only going on a little vacation while you pay down your proposal. Once you are done, the loans will still be there.
Take time with your decision and make sure to find a reputable company.
February 29th, 2008 at 10:34 am
Check with the Better Business Bureau once you have compiled a list of companies.
Consolidating helps, yes, but the companies don’t have to report you as in good standing while you are paying them back. That can/will effect your credit score which could have implications for other things, like jobs and insurance rates.
Good luck! Hang in there!
March 2nd, 2008 at 4:47 am
You can do eveything that the consonlidating companies advertise by yourself. Call your creditors and ask to negitoate better terms with them. Explain that you are having a hard time paying their bill, but want to pay them off. Mention that if they don’t budge, that you may have to go bankrupt. This should get them to help you out, as any payment they recieve from you is better than none.
The companies will do the same thing, then pay off your bills and take over the debt. Thus you repay the debt companies. Your credit gets shot, and you wind up in a hole that is hard to get out of.
March 2nd, 2008 at 10:06 pm
My friend had to do this and it really helped her out, but she said that it looked bad on her credit. Of course, her credit wasn’t that great to begin with, hence the debt consolidation. I think that her biggest problem was that although she got help consolidating her debt, she continued to spend too much money and get herself deeper in debt. If you have no self control, it’s not going to help you.
Another friend of mine didn’t go through debt consolidation, but got a loan through her bank to cover all of her debts. Now, she has one payment instead of, like 6, and is only paying interest on that loan instead of on 6 different debts. The minimum monthly payment for the loan is, for example, $200.00, but she was paying nearly $800.00 before on all those bills, so she continues to pay $800.00 on the loan and is paying it off very quickly, which looks good on her credit.
You just have to be very very careful and read the fine print, no matter what you do.
I wish you luck!
March 4th, 2008 at 8:17 pm
In most cases, it is a scam because you pay more in the long run. Depending on your circumstances, it will probably be better not to consolidate.